Trump’s Proposed Tariff on Mexican Exports Will Backfire

By George DeMartino

The new Trump proposal (now under consideration by his administration) to get Mexico to pay for the proposed wall along the Mexican border through a 20% tax on Mexican exports to the US violates a range of international trade laws, and is apt to generate retaliation by Mexico. Mexico’s right to retaliate is assured by the WTO, and so would survive any attempt by the Trump Administration to cancel NAFTA. That retaliation could hurt important sectors of the US economy given that Mexico now absorbs about 15% of total US exports. But in addition to the harms from retaliation (and from the wall itself), the funding proposal is likely to backfire in at least five ways.

  1. The incidence of the tax will fall heavily on and American firms at home that import from Mexico, American consumers, and American firms in Mexico that export to the US. US retailers will look to offset higher import costs by reducing other expenses, such as by shedding employees. So will firms that import inputs from Mexico for final assembly in the US. Here, too, pressure will mount to cut costs in ways that harm American workers. And for goods without immediate substitutes, like some agricultural goods, US consumers will be on the hook for a greater share of the tax. Despite appearances and Trump’s claims to the contrary, then, Americans will pay a substantial share of the costs for Trump’s wall. But don’t expect Trump to trouble himself with the basic math.
  1. For Mexican exports for which there are ready substitutes, Mexican and US firms producing in Mexico will bear a greater share of the tax in the form of reduced revenues as they struggle to maintain their exports to the US. But very soon Mexican exports to the US will decline as US importers look to buy from other countries. The decline would of course reduce the expected revenues from the tax, and trigger other unintended effects (see #5, below).
  1. President Trump will say that the tax will induce US companies producing in Mexico to relocate production and jobs back to the US. It is unlikely most will do so. If corporations in Mexico think the tax is likely to persist, they are more likely to move production to other low-waged countries than back to the US.
  1. In fact, if the tax persists for even a year or two, it is much more likely to accelerate a trend already under way—the substitution of Chinese for Mexican goods in US markets. China has posed a serious threat to Mexican exports of high-skilled and medium-skilled manufactured products for at least a decade. The Trump tax will only accelerate the trend. And so Chinese leaders are apt to be even happier about the tax (and, also, about the Trump wall) than are Trump supporters in the US. It’s not at all far-fetched to argue that the primary beneficiary of the tax on Mexican exports to the US will be China,followed by a small number of other low-waged countries that will rush to exploit the opportunity created by increased Mexican prices in the US market.
  1. The social impact in Mexico could be severe. Like most economic shocks, the tariff will hurt the most vulnerable communities rather than the administration of Mexican President Peña Nieto, who could very well begin to reverse his abysmal level of domestic support by standing up to Trump. To the degree that the Trump tax reduces Mexican exports, it can be expected to increase the number of financially desperate Mexican workers trying to enter the US—legally and illegally—and even push some displaced workers into illicit market activity. And so the Trump tax will undermine the very purpose for which it is intended—to reduce illegal border crossings—while harming working people on both sides of the wall.

George DeMartino is a Professor at the Josef Korbel School of International Studies, University of Denver

Echoes from the past in Colombia’s Developmental trajectory

By Rafael R. Ioris 

This past October 2nd, Colombian voters surprised almost everyone when they voted to reject the Havana Accords signed between the country’s government and the FARC (Fuerzas Armadas Revolucionarias de Colombia), the country’s main remaining armed insurgent group. In contrast with similar attempts in the early 1980s and late 90s, this round of negotiations was seen by most, inside and outside the country, at least until a few days ago, was the culmination of a process of national political restructuring that could finally produce a much sought and needed lasting peace.

The process innovated from the conservative path, known as the Democratic Security Policy put together by the Uribe administration (2002-2010), in the wake of the national crisis of the 1990s. This hard-handed approach trailed a path of pro-market reforms and security improvements, supported in the international investment community as the best way to restructure the country’s economy, especially in a time when much of Latin America was surfing the so-called pink wave. Interestingly, the market reforms were paralleled by the encroachment of state repression of the traditional guerrilla insurgents, particularly under the guise of Plan Colombia and associated growth of paramilitary forces. Though, some of the latter was eventually curbed, largely due to international pressure, the rise in military spending in the national budget was continuous and permanent.

The recent peace negotiations were, as to be expected, permeated by many steps and a gradualist approach involving at the same time legal reforms and public policies to areas of conflict (e.g. subsidized scholarships and housing). And although in the last few years insurgent group activities decreased, this was not necessarily translated in many areas of the country into actual state rule or at least state presence. In fact, in many rural and more isolated regions, the continued threat of reverting back to a state of overt violence is still very present and many still find in illegal activities their main means of subsistence. Moreover, in what seems like a very rational vote, regions mostly ravaged by war-related activities, such a Choco, produced some of the highest levels of support for the Havana Accord.

But in addition to the failed plebiscite, Colombia faces today rising levels of organized crime activity not only in the countryside but also in urban areas. Yet, as challenging as these latest dynamics are, they have occurred not in the void but rather within an already deeply unbalanced land tenure structure which have plagued the country’s history. In this sense, though laudable for trying to move beyond an overly militaristic approach to the structural lines of the continued conflict in the country followed by his predecessor, Santos’ political overtures have to be complemented by actual economic measures aimed at reintegrating many communities into the national economy, particularly in times when Colombia’s mainstream economic policies have become ever more aligned with those of free-trade agreements, such as the Trans-Pacific Partnership.

To be sure, land reform and restrictions on foreign involvement in key industries, such a mining and oil exploration, were some of the main demands the negotiators from the FARC presented repeatedly to the government in order to suspend activities In fact, the growing acceptance of the Santos’ administration of the land reform demands from the FARC had been seen as one of the most promising aspects of the peace negotiations. Demands for better access to economic means are not surprising in a country ravaged by land-tenure related historical conflicts. In fact, even when an assertive land reform program was sought, little was done to curb countryside violence which, in the end, costed the staggering amount of about 200,000 deaths, mostly of poor, countryside residents.
Like much of Latin America, Colombian historical path has been defined by continued sharp socio-economic contrasts and the succession of fast-paced developmental initiatives – such as a remarkable insertion into the global economy as an important primary commodity exporter, starting at the end of the 19th century, as well as the significant levels of industrialization achieved in the middle of the 20th century – which though successful in many senses, have not been instrumental to ameliorate, let alone address the severe inequality that is to this day a defining feature of the country. In effect, rather than serving to improve the living standards of its sizable population (the third in the region), the developmental trajectory of Colombia has been rather defined by sustained oligarchic rule and social exclusion.

This persistent course of events seems particularly disheartening when one considers more closely the events of the postwar era in the country. This was the period when Colombia witnessed a substantial degree of economic and political experimentation and change. In fact, the nation experienced fast-paced economic growth, important levels of industrial growth in different parts of the country, and, especially since the late 1950s, and even more so in the 1960s and 70s, when the county came to be seen by most of its regional neighbors as a remarkable case of success of liberal democratic institutions.
In effect, given the context of dictatorial regimes throughout much of the region in the period, the Colombia experiences with pre-accorded peaceful transitions of power among the two main political parties, Liberal and Conservatives, in the wake of the National Front Agreement of 1958, seemed warranted as a case of a functioning, at least formally representative, political system. Yet, the Colombian experiences since at least the middle of the 20th century should rather be seen as those of the history of the failure of formal liberal democracy, as well as the top-down attempted modernization. On the liberal democracy side, between 1958 and the late 70s, though some changes were made along the way, the Colombian political system was best characterized by coalitional rule between Liberals and Conservatives, at times in ways that resembled the experiences of consociational regimes, though in the Colombian case, without the ethnic, religious, or linguistic elements.

Thus, although the National Front was able to put an end of the traumatic experiences of La Violencia, by creating strong incentives to the two main parties, if not to cooperate, at least to accept the rules of the game, the restrictive nature of the political to all other relevant political forces, especially among popular sectors, was nonetheless solidified by the elitist and restrictive character of the power-sharing agreement then in place. The oligarchic nature of the Colombian state was further reinforced by a central feature of the historical political evolution of the country: its weak central structures of state and strong regional elites. Taken together, these characteristics of the Colombian developmental trajectory would, in the long run, prove conducive to rising levels of dissatisfaction particularly in periods of rapid demographic grow, such in the postwar era.

The formal shortcomings of the Colombian political institutions were also aggravated by the frustration of even middle-income sectors about the possibility of significant socio-economic reform within the formal political system. In fact, even when land reform was attempted in a more concerted fashion, such as during the sponsorship of the Alliance for Progress in the early 1960s, when the country was chosen to be a showcase of the initiative, the results of the program palled against the expectations of the Colombian and US governments, and were certainly less than what was needed. Much in the same way, the important industrialization of the middle of the century was largely derivative of a cross-sectional alliance between traditional landowning families and regional industrialists, which rather than create a new social segment capable of some sort of rupture from the traditional forms of exerting political power, worked to consolidate control of the decision-making process in traditional oligarchic forces, thus sustaining the path of restricted access to the decision-making process, though industrial workers did then, and still do their best to push the boundaries of the local and national spheres of economic and political power.

In this sense, though it may be true that the National Front proved successful in preventing military overt intervention in politics for much of the second half of the twentieth century – a time when much of the region was mired in co-called bureaucratic-authoritarian regimes – this positive outcome was reached at the cost of excluding more socially advanced, progressive and even radical demands. This path indeed enhanced the already present political apathy of growing numbers of political and economic disenfranchised groups; and the guaranteed share of state resources in all realms of government which assured the democratic election of four, Liberal and Conservative party presidents, between 1958 and 1970, was conducive to enhanced corruption and clientelistic patronage of favored supporters. Much in the same way, although the formal economy of Colombia has been strengthened in the last few decades, two main negative sides of these dynamics have to be highlighted. First, the continued deeply uneven ways in which the economic growth achieved in the period benefitted the country’s population. Secondly, the fact that an important, though not easily measurable element of this economic revival derived from the eve more present production and exportation of illegal drugs. To be sure, the 1990s was largely defined by the rise of flaunting drug lords (e.g. Pablo Escobar), who control enormous economic resources and related political influence in the country.

If one considers that about 2/3 of eligible voters abstained from participating in the recent plebiscite, most Colombians did not agree with the terms of the agreement or did not feel encouraged to participate in the process. To be sure, a viable agenda for lasting peace has to include in addition to cessation of conflict, a minimal agenda of development, which needs to have key elements of social justice understood as the reforming of the institutional conditions that sustain and reproduce poverty and inequality, including moving away from the historical, and more recently deepened, path of insertion into the global economy by means of commodity export, especially in the field of carbon-based energy production. In fact, it needs to be remembered that much of the end of violence sought under the Politica de Defensa y Securidad of Uribe was aimed most of all to create a more welcoming environment for foreign investors rather than actually addressing the deep-rooted causes of the continued conflicts in the country.

Actual integration of FARC into arena must be paved by concrete means to prevent the repetition of the experiences of the Union Patriotica of the mid-1980s, when more than 3000 former members of the FARC who had joined the political process were murdered with total impunity assured by the omission of the state apparatus. Similarly, effective representation of most affected communities in the violence, especially those more in need of land needs to be a central element of the any new move towards a sustainable peace, so that the errors of the past, when the National Peasant Association, though formally allowed to exist, was consistently undermined by conservatives administration in the 1970s, as well as the market-led land policies of the 1990s, which benefitted most the already capitalized, larger landholders.

In the short term, the Santos administration needs to prove capable of preventing the derailment of the commitments made by both sides in the Cuba Accords, largely by steering things away from the rising right-wing rhetoric of his right-wing predecessor. Moving forward, a new agenda along more inclusive lines of national development needs to be pursued, especially by means of effective political and economic incorporation of the most traditionally excluded social segments, particularly in the countryside.

Rafael R. Ioris is an Associate Professor of Latin American History and Politics in the Department of History in the University of Denver

How Immigration Policies Create Smugglers

Photo courtesy of Wikimedia Commons

This blog was originally published on the Allegra Laboratory website. Find the original post here.

By: Rebecca Galemba

In the spring of 2007, when I was driving with Ramón (all names have been changed), a Mexican man who lives along an unmonitored road that crosses the Mexico-Guatemala border, we passed one of the newer, two-story homes. I commented that the house had its outdoor lights on all day. Ramón shrugged. “He won’t care. He’s rich”, he said. “He doesn’t care about the lights”. Ramón told me that the owner – Gerardo – used to be a pollero, or a human smuggler, who brought many people to the United States. But he stopped, according to Ramón, when “things became more complicated” and Mexico intensified immigration surveillance in the mid-2000s.

Other border residents also whispered that Gerardo used to be a pollero or coyote, another term used to refer to migrant smugglers. The whispers were usually followed by an assertion that he was no longer a smuggler. Now he just raised cattle. Prior to the late 1990s and early 2000s, many border residents provided Central Americans with rides into Mexico with little fanfare.

Mexico’s intensification of border policing and concerted securitisation of migration can be traced to the US-backed Plan Sur in 2001 to support US security concerns. The escalation of the drug war in Mexico in 2006, and Mexico’s implementation of the Southern Border Plan in 2014 in response to Washington’s outcries of a “surge” on the border in 2014, further intensified migrant policing.

Mexico has concentrated border surveillance on select, modernised border points of entry, as well as on ad hoc highway roadblocks to establish ‘belts of control’. However, migrant desperation, continued demand for cheap labour in the United States, and widespread official corruption and impunity has meant that heightened securitisation has not deterred migration. Instead, migrant smuggling at the Mexico-Guatemala border has shifted from more informal networks and local guides to higher-priced smugglers and criminal groups as human rights abuses against migrants increase.

How Gerardo became a smuggler

The first border residents, whether from the Mexican or Guatemalan side, who went to the United States in the 1990s all went with Gerardo. Miguel, a Guatemalan border resident, joined other young men from the Mexican side of the border. “We all went to the United States with Gerardo before he was a coyote”, Miguel said. They went to work on pine tree plantations in Alabama. Since Gerardo was the first to work at the plantation, he found work for others. At first each man used his own money to travel to the northern border, where they hired coyotes to help them cross the US-Mexico border.

Gerardo did not charge any of them and also worked on the plantation. Subsequently, Gerardo recruited his friends more formally under work visas through his employer in Alabama. The ironic twist was that the visas were for Guatemalans, and so the Mexicans purchased false Guatemalan papers in La Libertad or Guatemala City. Border residents believed that work visas were easier to acquire in Guatemala than in Mexico, after the end of Guatemala’s 36-year civil war in 1996. Due to fewer applicants, visas were also less competitive in Guatemala. When the visa process expired, people were still able to go north without documents, as the cross-border migration and work networks were by this point established. Later, Gerardo brought the same people from the same places to the same location. This time he charged, making him a coyote.

Yet the stories surrounding Gerardo’s role shift depending on the point in time and the interlocutor. “No, he wasn’t acoyote…they are from bigger cities”, one Mexican border resident said. “Some people say he is, but he was acontratista [contractor], since his boss in the US would send him here to bring others … they went with visas, which they bought in Guatemala”. Others mentioned Gerardo’s role as a labor contractor and coyote as one and the same; the only thing that changed was how he could bring people to the employer in the US. In other words, Gerardo was converted from a fellow migrant to a labour broker to a smuggler depending on changes in US immigration and visa processes, all the while continuing to provide his Alabama employer with Mexican and Guatemalan workers.

Some residents wonder how Gerardo made so much money, but others see him as someone who helped others regardless of whether they called him a fellow migrant, smuggler, or contractor. “He is the one who helped many people from here go to the US”, Gerardo’s cousin noted. “He helped the majority from this region. Since he was one of the first to go, he helped others to go with visas and then others as a coyote. But then he stopped … when it got more dangerous”.

When smuggling becomes a profession

As Mexico enhanced immigration surveillance and criminalised smuggling, and drug cartels expanded into human smuggling and preying on migrants, smaller-scale smugglers like Gerardo left the business. It became more dangerous to crossing through Mexico and more expensive to evade corrupt officials, checkpoints, and criminals. Locals preferred to go with local border guides and brokers since they trusted people with whom they shared social and kinship connections.

In recent years, border residents have had to search for smugglers in larger cities, those who may specialise in, or have deeper connections to, smuggling networks. Smugglers are increasingly necessary to helping locals navigate Mexico’s proliferation of immigration checkpoints.

Eduardo, a Mexican border resident, referred to how migrant smuggling transformed from a networking service to a more lucrative and risky business that locals increasingly associate with drug trafficking regardless of actual overlaps. He mentioned that Gerardo probably never made much money bringing people. Eduardo also used to “deliver” migrants to smugglers locally and occasionally to the northern border as a teenager. But, he told me, “[in those days] it was very little and it was different…easy…I barely made anything”.

Eduardo confided suspicions about Gerardo and his earnings that led locals to collapse migrant and drug smuggling together. Gerardo had a small horse track on his property in a region where horse races are often associated with drug exchanges. “That is where they do exchanges … it is all narcos”, said Eduardo. Eduardo suspected Gerardo was collaborating with people working in drugs and pollos”. But, he said, “do not tell people where you heard that”.

Prior to Mexico’s intensification of migrant surveillance, smuggling migrants may have still been illegal, but it was a mundane, relatively benign aspect of border life.

Previously an activity that most residents engaged in to some degree, they have been pushed out of migrant smuggling by its increasing risk, price, and criminalisation under Mexico’s intensification of border policing since signing Plan Sur in 2001, and most recently, under the 2014 Southern Border Plan. In turn, the increasing criminality and corruption surrounding migration make border residents not only avoid it, but also fearful to even talk about it. Once a fact of border life, they no longer spoke about migrant smuggling, or talked about it as something they did in the past, or spoke about it quietly.

Just like the drug traffickers they knew passed through their community, they knew migrant smugglers used this route, but did not see or hear anything. As one border resident told me, “if drugs come through here, we don’t realise. They don’t bother us”.

At this particular juncture, border talk around human and drug smuggling alternates between silence and rumour as the landscape shifts. Rumour can help people living in a constant state of fear navigate uncertainty while it also serves to govern the movements of the vulnerable. At the Mexico-Guatemala border, alternating silences and rumours protect local residents while they also enhance the illicit aura around drugs and migration and perpetuate silence and impunity.

As Gerardo’s narrative demonstrates, the profile of the human smuggler is shaped by fluctuations in migration policy and policing. Nicholas de Genova critically examines immigrant illegality by pointing to how changing laws, rather than migrant and smuggler actions, produced “the legal production of migrant illegality”. By extension, to understand the evolution and fear of the criminal smuggler, we must become attune to the criminalisation of human mobility. The criminalisation and uneven policing of boundaries has shaped and structured the strategies of those seeking to evade them, as well as created and altered the constellations of actors who serve as brokers at the disjunctures between borders, their incomplete enforcement, and human mobility.

Rebecca Galemba  (PhD Brown University), is an anthropologist and has been a Lecturer at the Josef Korbel School of International Studies since 2012. Learn more about the Latin America Center.